Blockchain, Bitcoin, cryptocurrencies…what’s the difference? Why does it matter? What does it mean for our future? It feels like the topic of the year regardless of the industry you’re in. Earlier in the year we wrote an article on cryptocurrencies in the real estate world; buying homes and paying rent with digital currency. While some are splitting up a transaction to use some cryptocurrencies, others are doing the entire transaction via cryptocurrency. There’s even a “Blockchain real estate platform” called ShelterZoom that just announced their application is live in over 10 states.

It’s all happening very quickly, but it’s important to make sure we’re all caught up on the basics. Let’s start here:

Cryptocurrency: Digital currency, exchanged and traded over the internet. They’re designed to create a more secure route for trading, and more secure documentation of who traded what, when.

Bitcoin: A decentralized cryptocurrency, that works without a central bank, allowing for less restrictions. It’s the most well-known cryptocurrency.

Blockchain: The network and ecosystem in which bitcoin sends and transfers money on. It’s the foundation that powers Bitcoin and the other cryptocurrencies.

The gist, is that this network is public and can be used to transact anywhere in the world without a bank or “middleman.” It’s also cheaper to do the transaction on Blockchain compared to the traditional way. Our favorite way description of how it all works:

“Imagine that you and your best friend Bob are standing on a stage in an auditorium, and there are 1,000 people in the audience. In front of these 1,000 people, you hand your car keys to Bob, and Bob hands you his Rolex. You declare, “Bob, you now own my car.”

Bob declares back to you, “You now own my Rolex.” There are 1,000 witnesses who can each declare, without doubt, that your car now belongs to Bob, and the Rolex belongs to you. If anyone in the audience later tells a conflicting account of who owns the car or the Rolex, the other 999 people will refute it. And, if you take a spare set of your keys and try to give that same car to someone else, the 1,000 audience members will confirm that Bob owns the car, as each of them witnessed the “transaction.”’ (Forbes, 2018)

While some may say they don’t feel comfortable using Bitcoin or other cryptocurrencies, or don’t trust the network Blockchain itself, others will swear by its innovation in security. The thing is, if you buy a house with bitcoin, you’re technically still buying it in cash, it’s just being converted into a cryptocurrency first. So, how will Blockchain affect the industry as we know it?

Buying/Selling Before you write it off, real estate transactions could get a whole lot easier. Not only that, but they could get a lot more secure as well. With accurate data and efficiency as its strengths, Blockchain will eliminate the need for a third party; no more waiting for bank wires and checks to clear. On Blockchain, every user has a unique identity via cryptocurrency, meaning financial info can be shared securely to other parties, making the Escrow process a walk in the park.

MLS As we all know, the MLSs across the nation are tremendously scattered and fragmented. Each one has different restrictions, making it hard to compare data and find trends. While others in the industry, such as Upstream, are trying to solve this issue, Blockchain technology could be the single point of truth that fixes the MLS problem. Secure, nationwide data, with real-time access to property information, what’s not to love?

Records Titles can be hard to access. Blockchain is starting to change this, with its ability to be a record-keeper for any kind of transaction out there. Smart contracts, personal records and credit history, trademarks, elections, titles – you name it. That means it could also provide a central database for all property titles, saying goodbye to paper titles for good.

In the future where Blockchain rules the land, real estate professionals will actually thrive in it. This technology will only improve the industry and lives of those in it; it’s not a technology you need to be afraid of. We say, learn as much as you can on the topic, stay up-to-date, and get involved hands-on as early as you can. For every one person who is against a decentralized currency, there are two more who are about to hop on the bandwagon.

“Bitcoin accepted.” A not-so-strange note to see anymore. Digital currency, or cryptocurrency, is hot and some of those in real estate are now using it to appeal to young renters. That means saying goodbye to mailing checks and hello to using an API that converts a digital currency payment into U.S. dollars. Yes, there are existing apps out there doing this. For instance, the app Coinbase, uses “the platform to manage relationships with their tenants,” by converting the cryptocurrencies and handling the middle man work.

Not only that, but sellers are intrigued by cryptocurrencies as well, giving an option to pay a piece of the pie with Bitcoin or other digital currencies. Some will even go so far as to only accept Bitcoin. That’s right – cash offers might even take a backseat in some unique situations. Fortune.com recently came out with a list of what the tangible value is for Bitcoin versus value amount in dollars. For instance, in Seattle (where MoxiWorks is based), 51.6 Bitcoin is the equivalent of $725,000. This varies by city and my state. We should add that, yes, there have already been closings involving digital currencies across the States.

And yet…

Digital currencies like Bitcoin are getting major backlash because they’re A.) hard to regulate and B.) get hacked more often than not. Recently, tech giants Facebook and Google banned any ads related to cryptocurrencies. And although Twitter, Snap, and Microsoft still allow them, they might be jumping on the bandwagon soon as well. These announcements were extremely damaging to cryptocurrencies, causing prices to plummet, but some experts are saying that it might help them in the long run since these policies are a step towards legitimacy. The jury is still out on it.

The problem is, unless you’re an investor or are independently wealthy and open to taking on great financial risk, or are extremely mesmerized by the crypto movement, few sellers are going to accept it in replacement of cash and putting money in the bank. As with anything, there are early adopters, but there’s no way to tell if Bitcoin will succeed or bust and since home buying and selling are some of the largest transactions in someone’s lifetime, the risk is often not worth the reward.

For real estate, you might be able to use it in a few circumstances, but there’s a long road ahead before the industry accepts cryptocurrencies as the “norm,” with open arms and little suspicion. With skeptical daily chatter and constant negativity in the headlines, one thing’s for certain: cryptocurrencies need more time to mature to be taken seriously in our market and beyond.

The next time you purchase a car, it very well might be a self-driving one. It’s a headline our eyes now only glance at because we’ve seen it so many times and it’s only a matter of time before it comes to fruition. We’re not only okay with that technology, we’re jazzed about it. We’ll all be able to work, read, and relax during our commutes and trust that we’ll get to our destination timely and in one piece. There’s foreshadowing of another technology too. One that would not only upset our industry, but would tear it to pieces, and that’s the tease of robots as real estate agents. It’s a viable conjecture, especially given how technology is now paving the way for the future of our industry. The problem is, the home buying journey has a very different barrier to trust and breaking down that wall will be close to impossible.

People got their heads out of the sand (some didn’t) and we’ve seen rapid change in the past couple of years. VR (virtual reality) tours are a “thing” homebuyers now expect when they’re house hunting. You can even pay your rent with bitcoin (crazy, right?). The one constant that our industry has always had, though, is that homebuyers choose an agent. That agent happens to be in the form of a human. And that will never change. The CEO of Compass even agrees with that.

Sure, some will be interested in a robot agent. We imagine Elon Musk himself would be eager to try out a robot instead of a human agent for his next transaction. The problem is, most of us are not Elon Musk. We have a comfort zone and although we step out of it more often than before, we stick to it when it comes to the biggest financial transaction we do in our entire lifetime. Robots may charge two percent commission instead of the typical five or six, but guess what? Consumers don’t care. Or, they don’t care enough to risk it. If they cared enough about that five or six percent, they’d be listing their homes by themselves or using Instant Offers (which, I’ve never heard of an actual situation where someone did).

Here’s why people choose people:

It’s emotional.

Extremely. Real estate agents serve as a sounding board and a therapist just as much as they do a trusted advisor. People want someone who will answer phone calls at midnight when the home seller is crying and stressed because something unforeseen went wrong last minute during the transaction. They want someone to send a bottle of champagne to congratulate them on their great home sale with a heartfelt note because they got through it together as a team. Robots don’t promise to hold their hand from the very beginning, all the way until they’ve moved and settled into their new home.

Buyers and sellers want to sit across from someone in a coffee shop and talk face-to-face. They want something tangible. They want to shake someone’s hand and know that person actually cares about them and their family and that they have feelings and blood running in their veins like they do theirs. Because that is how emotional a home transaction is.

It’s complex.

First time buyers all the way through home buying veterans use agents. Why? Because there is always a new situation, a new question, a new issue that pops up that they haven’t seen or dealt with before. Maybe it’s an issue with the mortgage company or maybe there was an issue with escrow. Maybe you just want some advice on what color to paint your living room before the house is listed. Whatever it is, the agent is prepared to handle it.

Let’s back up. AI probably has a place in real estate when it comes to scheduling, answering simple questions, etc. But it will never, ever replace the human connection that is found between a trusted advisor and their beloved clients.